Fine Print: Understanding the details of the new credit card laws

Staff reports

Monday

Feb 22, 2010 at 12:01 AMFeb 22, 2010 at 9:16 PM

The new Credit Card Accountability Responsibility and Disclosure Act took effect Monday, and you're probably wondering what it means for you. If you're like most credit card holders, you probably don't read much into your credit card's terms and conditions. Well now is the time to change that - at least to find out how those terms may be changing in light of the new CARD Act.

The new Credit Card Accountability Responsibility and Disclosure Act took effect Monday, and you're probably wondering what it means for you. If you're like most credit card holders, you probably don't read much into your credit card's terms and conditions. Well now is the time to change that - at least to find out how those terms may be changing in light of the new CARD Act.

Here's a rundown of some of the more prominent changes, courtesy of the Better Business Bureau:

- More advance notice for rate changes: Credit card companies need to notify customers at least 45 days before an interest rate change. Promotional rates must stay in place for at least six months. And card holders can't have rates changed in the first year unless the changes are initially disclosed.

- Cardholders' exit option: If significant changes are made to the account, card holders can reject the changes and will get five years to pay off the balance under the original terms.

- Age restrictions: Card issuers will no longer be allowed to issue a credit card to anyone under 21 unless they can prove they have the means to repay the debt or if someone over 21 co-signs.

- New rules for the monthly billing cycle: Monthly statements need to be delivered 21 days before the due date, in response to complaints about increased late fees due to shifting due dates.

- Overpayments will go to the higher-interest balances: If the card holder has varied interest rates for different accounts with a card issuer, any overpayments must be applied to the account that is incurring the highest interest rate.

- Increased disclosure: Card issuers need to disclose how long it will take the card holder to pay off their bill if they only make the minimum monthly payment - as well as how much the card holder would need to pay every month to pay off the balance in 36 months.

- Limits on fees: Card companies can't charge consumers extra fees if they pay online, over the phone or by mail - unless the payment is made over the phone on the due date or the previous day.

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